Municipal CryptoCurrency Case Studies
Dubai is currently the only city in the world that has started to implement its own cryptocurrency, emCash. In the US, the cryptocurrency proposal of the city of Berkeley attracted the most attention from the media. There is no city in the world that is using or considering using Bitcoin as its civic cryptocurrency. This is probably because Bitcoin is already created and it cannot be accommodated to fit the needs of the government. It could also be because Bitcoin is somewhat controversial, as it has received a lot of bad press in the past because it was being used for some illegal activities. However, The Town of Innisfil in Canada and the state of Ohio in the US are accepting Bitcoin for tax payments.
City of Berkeley
- The city of Berkeley, California is planning to go ahead with an Initial Coin Offering (ICO) for the city’s cryptocurrency, which does not have an official name yet. Even though the exact launch date is not known yet, it is expected to be launched in late 2019.
- The cryptocurrency will be backed by municipal bonds. The money raised by crowdfunding through the ICO will be used to fund city-issued municipal bonds.
- The funds generated by those bonds will be used to pay for affordable housing, homeless shelters, ambulances and street plantings.
- Owners of the coin will be able to spend the cryptocurrency in local businesses, and people are also considering using it as an apartment rent payment method.
- Mayor Jesse Arreguín and Vice Mayor Ben Bartlett are trying to make the municipal bonds more accessible to all citizens. This can be achieved through cryptocurrency, because bonds that are usually issued in denominations of at least $5,000 can be split into cryptocurrency tokens denominated in as little as a few dollars.
- Bartlett compared the proposal to a "non-profit, special-purpose vehicle, meant to fund social good".
- The system would work in such a way that the bonds would be sold directly to citizens via the cryptocurrency tokens. This would mean that underwriters would be excluded from the transaction and the total transaction costs would be reduced.
- While the cryptocurrency is still in the approval stages, implementing it could result in a way for one of the so-called "sanctuary cities" to continue to receive funding for homeless shelters and affordable housing even after restrictive funding measures proposed by the Trump administration are implemented.
- Funding affordable housing is especially important, since that type of funding has already been undermined by the implemented tax cuts.
- The official credit bureau of the United Arab Emirates, emcredit, run by the Dubai Department of Economic Development, announced in 2018 that it will launch emCash, a city cryptocurrency, some time in 2019.
- Dubai citizens will be able to use emCash for "retail payments in-store, to pay for government utilities, telecommunication, and school fees in government shopfronts", the official press release stated.
- emcredit partnered with Pundi X, and Ebooc Fintech & Loyalty Labs to deliver digital payments to its citizens.
- Pundi X has already started supplying digital payments devices called xPOS to retailers across Dubai. The devices will also be installed in offices of the government.
- Dubai residents use the digital currency via a smartphone app emPay which communicates with xPOS devices.
- "To be the world's first city to offer blockchain-based payment solutions to our residents is an exciting moment for Dubai. It confirms Dubai's status as an international tech hub. Deploying cutting-edge technology such as blockchain is a key priority and is delivering benefits to our citizens in the form of convenience and securities to customers and merchants across Dubai," a spokesperson for emcredit said.
- Additionally, in 2017, the Smart Dubai office, a government initiative led by the Crown Prince of Dubai, has approved a "citywide blockchain payments platform" that will connect all 38 government entities to increase the efficiency and transparency of the government.
- Experts expect that emCash and the government blockchain payments platform will be integrated in some way in the future.
- The initiative is still in its early stages and it still did not produce concrete results. In fact, the Dubai Telecommunications Regulatory Authority gave the final approval for the installation of xPOS devices as recently as May 1, 2019. The devices can now officially be connected to a blockchain network and used for processing payments.
- Lafayette Mayor-President Joel Robideaux proposed early last year that the parish create a "Bitcoin-like" cryptocurrency.
- Robideaux described the parish as a technological hub that would benefit from attracting people interested in emerging technologies like blockchain and cryptocurrency.
- The proceeds of the cryptocurrency ICO would be used to "build a living lab of blockchain researchers and developers," according to Robideaux.
- Even though the announcement attracted a lot of interest at the moment, the initiative has never been mentioned in the media since then.
Innisfil and Ohio
- In April 2019, the Town of Innisfil, Canada started accepting Bitcoin for property tax payments as part of a one-year pilot program.
- The town partnered with Coinberry, that created a cryptocurrency payment processing solution called Coinberry Pay.
- Coinberry will handle the payments and instantly convert them to Canadian dollars which will then be transferred to the municipality.
- "There’s no doubt that cryptocurrency is growing in usage and popularity. By getting into this now, we are making sure our municipality is ahead of the game, and signaling to the world that we truly are a future-ready and innovative community,"Innisfil mayor Lynn Dollin said.
- Similarly, Ohio became the first US state to accept Bitcoin for tax payments.
- Ohio partnered with Bitcoin payment processor BitPay that will convert Bitcoin to dollars and then transfer them to Ohio, exactly like Coinberry.
Prague and Buenos Aires
- Prague and Buenos Aires are considered to be the most crypto-friendly cities in the world.
- The two cities have the most vendors that accept Bitcoin in the world. Prague has 147 businesses that accept Bitcoin payments, while Buenos Aires has 141.
- Trailing the two cities are San Francisco (117), Madrid (101) and New York City (101).